The efficient-market hypothesis
A) implies that security prices properly reflect information available to investors.
B) has little empirical validity.
C) implies that active traders will find it difficult to outperform a buy-and-hold strategy.
D) has little empirical validity and implies that active traders will find it difficult to outperform a buy-and-hold strategy.
E) implies that security prices properly reflect information available to investors and that active traders will find it difficult to outperform a buy-and-hold strategy.

Question

Quizplus · Accepted Answer

The efficient-market hypothesis (EMH) posits that security prices fully reflect all available information, making it difficult for traders to consistently achieve higher returns than the market average through active trading. This supports the idea that a buy-and-hold strategy is often more effective.

The Efficient-Market Hypothesis